Fire Claim Case Study – how our service helped

August 3, 2022

A very longstanding client of ours, trading since the 1960’s, has been insured with us for around 50 years. They specialise in manufacturing bespoke office furniture, joinery and veneered panels.

A claim occurred in March 2019 where a fire had unfortunately broken out, after some smouldering debris had made its way to their external extraction hopper. It’s no surprise that the contents of the hopper ignited immediately, destroying the hopper as well as causing significant damage to the fabric of the building on that side.

Overnight, the client was rendered inoperable due to having no working extraction, something that all items of machinery were reliant upon. We were notified the next morning and immediately informed the insurers, and attended our client’s site the next day, with the insurer’s dedicated loss adjusters in attendance also.

Due to the quick response of all parties, we were able to instruct the client’s contractors to carry out the necessary emergency works to ensure the property was secure and weathertight after the fire had damaged several ground-floor windows. The loss adjuster was also able to confirm that the claim was valid and arranged an interim payment of £75,000 within a week, to ensure the client had funds available.

Once the initial emergency works had been carried out, we then focussed our attention on how we can enable the client to begin trading again either fully or at least in part. We have always been very thorough when arranging the client’s cover, particularly because they’re heavily reliant on very specific machinery, some of which has quite long lead times.

After discussing the client’s needs with the loss adjuster, it was determined that the client could trade to a reasonable level if they had use of some portable extraction units. Having factored in the potential need for unforeseen cost being incurred, we were able to use the ‘increased costs of working’ cover we’d included under the business interruption section. This is a provision, up to pre-defined limit, that allows the insured to incur additional costs that they wouldn’t have otherwise incurred had it not been for the loss.

This then enabled them to hire several extraction units that they could connect to the individual machines. It didn’t allow them to trade at full capacity, but it went a long way to mitigate the losses they would have suffered if they simply weren’t trading at all.

Alongside the increased costs of working section, we were also able to protect the insured’s loss of profits that they inevitably still sustained, by insuring their Gross Profit for a period of 18 months from the point the damage occurred.

We worked very closely with the loss adjuster and the client’s accountant to identify the typical trends in the client’s cashflow, to be able to gauge what level of turnover they would have typically achieved and so we were then able to quantify what the Gross Profit loss was. After all the above had been addressed, and the client had resumed normal trading, we were than able to finalise the claim and make the final payments to them. All told, the claim was settled for a little over £129,000.

What this case does, is identify just how important it is to make sure that the policy you’re purchasing is correct, and ultimately does what it needs to do. As a long-established broker, we have the expertise to tailor the insurances to your individual business’ needs.